If you’re a property developer or housebuilder, are you missing a trick by not investing in retirement properties?
Demand for Retirement Properties in the UK in 2022
The UK has an ageing population. There are nearly 12 million people aged 65 and above in the country. And the coronavirus pandemic has led many people to reassess their priorities in life, resulting in a growing number of people choosing to retire early, now or in the future.
Recent research shows that 58% of people who retired between March and October 2020 did so because of the pandemic and the number of people who plan to give up work between the age of 50 and the state pension age has more than doubled from 4% to 10%. Furthermore, a recent survey found that 27.3% of over-65s and 43% of those aged 55-59 would definitely or maybe consider moving into a retirement community.
The senior living market is one of the largest within the property development sector. There is a huge demand for suitable housing and the level of demand looks set to grow exponentially in the years to come.
How Much Competition Is There for Developers of Retirement Homes?
There is currently a massive gap between demand for retirement properties and supply.
In August 2021, the government announced a £40m funding injection from Homes England, their house agency, to expedite the construction of 255 new homes for older people. But there is still a woefully insufficient supply of housing for people entering the later stages of their lives.
Current options for retirees are limited to retirement homes built by a couple of major developers, including McCarthy Stone and Churchill Retirement, and care homes, which do not meet the needs of those who wish to continue living independently. Many of the existing retirement home providers have been criticised for levying high service charges on residents, which not only make day-to-day living difficult but also put off potential buyers when the time comes to sell. Owners are often forced to sell at a considerable loss.
According to recent data, there will be a shortage of 160,000 units that are suitable for retirees by 2030. The number of older people who would like to move into a retirement property is rising but many stay put because there is no suitable accommodation available.
For ambitious housebuilders who are eager to invest in retirement developments, the market is wide open.
Are Retirement Developments a Good Investment in 2022?
For your customers, there are pros and cons to buying a retirement property.
- Independent living.
- Access to additional services and support when you need them.
- New build homes are more energy-efficient.
- The provider will often manage maintenance issues.
- Exceptional leisure and social facilities.
- Opportunities to meet with people of a similar age.
- Continue living with your partner even if you have different needs.
- A safe and secure living environment.
- Communal areas for socialising and entertaining guests.
- It can be difficult to sell and may depreciate in value.
- Typically more expensive than properties on the open market.
- Not all retirees want to live solely with people their own age.
- Some providers set high service charges.
- New builds are often smaller than older properties.
- Not all retirement villages offer additional services and support.
New build retirement homes won’t suit everyone, but with demand far outstripping supply, they could be a savvy business investment for property developers. Especially if you establish a unique selling point (USP) and tackle the criticisms other retirement home providers have faced, such as high service charge and consequently a low resale value.